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The Moscow Times

Far East Traders Turn to Legal Businesses

By Sabrina Tavernise
July 31, 2002

VLADIVOSTOK, Far East -- In this sleek cafe, with exposed brick, track lighting and a chrome-rimmed bar, you can dine on fettuccini alfredo with salmon, sauteed mushrooms and Black Forest cake.

Not exactly typical fare for this bedraggled Far East city of drab, cabbage-scented cafeterias.

Even more surprising, perhaps, are the cafe's owners -- a scrap metal dealer with scarred knuckles and a shady past, and a 25-year-old whose father is a government bigwig.

Tucked in a courtyard at 18 Svetlanskaya Ulitsa, Vladivostok's main street, the cafe, Studio Coffee, is one of the few wisps of change in a wintry, tough port town that has endured political infighting, economic chaos, electricity failures and general decay in the decade since the Soviet collapse.

Throughout Russia, that decade saw a fierce tussle to divvy up the country's vast property pie. The lucky few amassed tremendous wealth virtually overnight. Now, the Wild East is becoming increasingly tame, and businessmen are beginning to turn from thuggery to more lawful businesses.

Studio Coffee's owners say their own move to restaurants from the lucrative but lawless scrap metal business makes economic sense: There is money to be made in espresso and lasagna now that a thin layer of wealthy and middle-income Russians has emerged.

But often, the break with the past is not complete. When Andrei Chunyak, one of the cafe's two partners, is not in the restaurant, he is trading scrap metal, still a fairly crime-ridden industry in Russia. Chunyak, 30, with a swaggering manner and a black leather jacket, is vague about the specifics, referring to it simply as his "production." He dismisses questions about connection to organized crime.

"What you see on TV -- it's rubbish," he said, referring to shows about the mob. "The main thieves are the bureaucrats. They are the mafia."

But the early days were rough-and-tumble. At the beginning of the 1990s, Chunyak said he sold used Japanese cars, a job that required an appetite for risk and, in his words, boxing skills. Chunyak, a tall, athletic karate specialist, looks the part.

The car business "was a disease," he said. "Everyone was throwing themselves at it. They learned boxing and went to the port to deal in cars. Sometimes the strong ones just took the cars."

His softer, less athletic partner, Denis Berestovoi, has different strengths. His father works for the regional government. Berestovoi, 25, freely acknowledges that connections with the government or the law enforcement authorities are essential to doing business here.

"You have to either have connections or a lot of money," said Berestovoi, who is quick to laugh and was wearing a button-down shirt and khaki slacks. "Rules are from Soviet times. If you follow them all, you'll never survive."

A craving to create something combined with the search for a hangout that had more on the menu than just warm beer and hot dogs gave rise to Studio Coffee.

It is housed in what had been a dilapidated storage space filled with books. The partners hired a Moscow interior designer, trained 50 employees and drew up a Western-style menu offering hamburgers, lasagna and espresso.

"We created this," said Berestovoi, smiling. "It wasn't just buying and selling stuff."

The partners of Studio Coffee are not the only ones moving toward legal business. The regional governor himself followed a similar path. Sergei Darkin, a fast-talking 38-year-old, worked in business before suddenly entering politics late last year.

Many have questioned his past. After college he worked in a local port and advanced with stunning speed, becoming the head of the port's operations and starting a leasing business called Roliz. He headed a large regional bank and helped run a fishing company.

His success has been attributed by some here to criminal connections, a charge he denies.

"People say he's a bandit," said Vladimir Gilgenberg, a former deputy in the local legislature and a newspaper editor. "They say that all he knows is how to run a port."

But Darkin's actions have surprised even his staunchest opponents. When he took office last summer, the region was in a shambles after years of mismanagement by his dictatorial predecessor. Darkin published the local budget -- previously secret -- and for the first time in years kept the heat on all winter.

"It's easier to breathe now," said Gilgenberg, a member of Yabloko, and a Darkin opponent. "The budget is almost completely known to me now. Elections have become more democratic."

Despite these changes, a vast majority of the 2.2 million residents of this region still live in poverty. Russia's economic growth is tentative and has yet to reach most people here.

Berestovoi said he expects his clientele to increase in numbers in the years to come. For now, the steady flow is mostly wealthy young Russians.

"If you have come to drink coffee here, it means that you've made it in life," he said, looking around the cafe. "Or that your parents have."

The Moscow Times, July 31, 2002

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